Oil industry not backing down on disclosure rule

Published 10:09 pm, Monday, October 29, 2012

Jack Gerard, president of the American Petroleum Institute, says: "We will pursue whatever routes are necessary to correct this ill-informed approach."

Jack Gerard, president of the American Petroleum Institute, says: "We will pursue whatever routes are necessary to correct this ill-informed approach."

Photo: James Nielsen, Staff

Oil industry not backing down on disclosure rule

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WASHINGTON - The oil industry will step up its fight against a new mandate that publicly traded U.S. companies disclose what they pay to harvest crude, natural gas and minerals from other countries.

The rule adopted by the Securities and Exchange Commission in August requires some 1,100 oil, gas and mining companies to report payments exceeding $100,000 made to other countries "to further the commercial development" of the host nations' resources.

The requirement has been championed by human rights activists who insist transparency could discourage graft, expose bribes and deter corruption in resource-rich nations where oil and mineral wealth isn't trickling down.

The oil industry has already filed a federal lawsuit challenging the rule. It also will look to Congress for relief once new lawmakers are sworn in next January.

"We will pursue the legal routes, we will pursue congressional routes," American Petroleum Institute President Jack Gerard told reporters after an API-sponsored energy event. "We will pursue whatever routes are necessary to correct this ill-informed approach to transparency."

On Capitol Hill, the mandate was the brainchild of Sens. Ben Cardin, D-Md., and Richard Lugar, R-Ind., who insist the key to empowering citizens in resource-rich countries is to hold their leaders accountable.

But the U.S. oil industry argues the SEC went further than Cardin and Lugar's provision in the Dodd-Frank law by requiring project-level reporting that could give their rivals a competitive advantage.

"When we're competing with the Russians (and) with other foreign nationally owned oil companies, we essentially have to show ... 'Here is what we expect on a rate of return,' " Gerard added. "They get the benefit of looking at all that data and then come back to compete with us."

Gerard insisted regulators could have worked with an existing voluntary program known as the "Extractive Industries Transparency Initiative" and that even if they accepted project-level statistics, they could aggregate the numbers before disclosing them.

Cardin and Lugar called the industry lawsuit expected but out of touch.

Lugar, who was defeated in a GOP primary and will not return to the Senate in 2013, said the domestic economy and American values benefit when U.S. companies work in oil-, gas- and mineral-rich countries.

"But, he added, "the benefits will not be realized if investments serve to entrench authoritarianism, corruption and instability."

Ian Gary, a senior policy manager with Oxfam America, an anti- poverty group that supports the requirement, said the oil industry "is fighting to keep investors and communities in the dark."

An SEC analysis determined the payment-disclosure mandate will cost up to $1 billion for all covered companies initially, then $200 million to $400 million annually.

Gerard said he thinks lawmakers can be persuaded: "When people truly understand its adverse impact - particularly as it relates to job creation in a tough economic time - I think there will be a lot of sympathetic people who understand our views."